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National Property trims dividend forecast on challenging lease market

Wednesday 29th September 2010

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National Property Trust, which plans to dump its manager and become a company, said a challenging leasing market means its dividend payment will be lower than forecast.

The annual dividend distribution will be about 4 cents a unit, down from the trust’s May estimate of about 4.5 cents. The payment amounts to about 90% of distributable earnings.

The trust has experienced lower than anticipated demand for vacant space and said the Christchurch earthquake may exacerbate the situation by increasing the amount of vacant space at its Eastgate Shopping Centre. Against that, there may be increased demand for commercial space at its Torrens House property.

“We are seeing continuing evidence that trading conditions will remain challenging with softening rentals and higher vacancy rates,” general manager John Crone said.

The trust said it is making progress with its corporatisation project and the manager is planning to hold a special meeting of unitholders on November 25. The costs of developing the corporatisation project had been estimated at $850,000, which will be treated as an abnormal expense excluded from distributable earnings.

The cost will probably be at the upper end of the initial estimate, due to the complexity of the proposal, the trust said.

The trust’s manager, part of the St Laurence group that escaped receivership, agreed to develop an exit strategy and relinquish its management rights for $2.5 million, selling back its holding in the trust after pressure from a group of unitholders including the Cushing family.

The group said the trust has performed poorly under the St Laurence umbrella and current arrangements are untenable.

The units last traded unchanged at 53 cents and have gained 8% this year.

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